Android, Windows Phone 8 Grow U.S. Mobile Market Share; Is BlackBerry Near the End?

Phones running Google's (GOOG 9.79%) operating system continue to lead over iPhones powered by Apple's (AAPL 0.07%) iOS, according to the latest comScore smartphone market share report. The study also shows that Microsoft's (MSFT 2.12%) Windows Phone operating system has made some gains while BlackBerry's (BB 1.98%) future -- at least as a maker of high-end handsets for Americans -- may be in serious jeopardy.

Android ranked as the top smartphone platform in March with 52.2% market share (up .7% from December), followed by Apple with 41.4%, Microsoft with 3.3%  (up .2%), BlackBerry with 2.7% (down .7%), and little-known Symbian with .2%.

Source: comScore MobiLens

At the top Apple at 41.4% lost some ground to Android though its sales only fell by .4% with more of the 1.1% swing coming from Android gaining .7%. If you go back further to October 2013, comScore had Android at the same 52.2% it stands at now with Apple at 40.6%. Apple may have fallen from December to March but it clearly gained some market share following the release of its iPhone 5S and 5C models in late September. Since the more popular of those phones, the 5S, was back-ordered for weeks the impact of the launch likely started to be felt in October.

Android maintained its share in October despite the 5S launch, lost a little ground in January coming in at 51.7% and then climbed back to 52.2% in March. Apple clearly got a bit of a boost for a few months (through the holiday season) after its new product launch with the bloom fading a bit after a few months. Android has the advantage of having an almost constant new product cycle since so many companies make phones using the OS. It would not be shocking to see Apple continue to lose share slowly until its next new release with Android staying flat or gaining slightly from the dwindling pool of non-smartphone users who dip their toe into upgrading by buying cheap Android phones. However you parse the movement of the top phone operating systems it's clear that Apple and Android are entrenched in a two-horse race with everyone below fighting for scraps.

At the bottom of the survey Microsoft and BlackBerry seem to be going in opposite directions. Microsoft is clawing its way to at least a small share while BlackBerry looks ready to fall into irrelevancy. Though the overall move of .9% is smaller than the shift between Apple and Android, it means more because BlackBerry's slow death as a U.S. handset player has seemed inevitable. But whether Microsoft can become a real number three remains an open question. A .2% gain in market share does not in any way guarantee that Microsoft can climb into relevancy, but BlackBerry's .7% drop shows that its comeback as a U.S. handset maker is failing and any future it has will come outside of phones.

What's next for BlackBerry?

BlackBerry CEO John Chen has only been on the job since November and his main task has been stopping the company's free-fall, conserving cash, and coming up with a strategy to return the company to viability. He has made progress in that regard -- the company launched a stand-alone version of its once-popular BlackBerry Messenger which, according to the company's third quarter 2014 financial press release, signed up "over 40 million newly registered iOS/Android users in the last 60 days." Chen also made a joint device development and manufacturing agreement with Foxconn -- a partnership with a focus on developing a consumer smartphone for Indonesia and other fast-growing markets in early 2014.

Those deals may transform BlackBerry into a software company that sells lower-end smartphones in the developing world. There's nothing in the company's strategy that suggests it will make a real attempt to return to its once lofty place in the U.S. smartphone market. The company tried to do that with its belated Blackberry 10 OS and line of phones, but they didn't catch on with U.S. consumers.

There are signs that Chen's moves are working. Though the company reported revenue for the fiscal year ended March 1 of $6.8 billion, down 38% from $11.1 billion in fiscal 2013, expenses in the fourth quarter were down over 50% from the the first quarter of 2014. Despite the drop and the fact that the company lost $711 million in fiscal 2014, Chen managed to conserve cash as BlackBerry finished the first quarter with $3.1 billion in cash and cash equivalents and ended the year with $2.7 billion still in the the bank. 

Slowing the burn rate should give Chen more runway to transform his company, but that transformation will not include a return to being a major player in the U.S. smartphone market.

Can Windows Phone 8 become a thing? 

Microsoft  has so much cash that it can attempt to spend its way into market share, and the company is attempting to do that with its Windows Phone 8 operating system. Most importantly Microsoft spent over $7 billion to purchase Nokia's phone business mostly as a way to keep its major partner from going under, which would have left Windows Phone as an OS with very limited phone choices.

Microsoft's growing market share -- and its ability to grow further -- may depend on whether the company can make Windows 8 a success. The Windows Phone 8 OS along with the Windows 8 that runs on laptops and tablets are meant to offer users a cohesive experience in the way that Apple's iOS does between iPhones, iPads, and Mac computers. Android can't offer that experience and Microsoft may be able to grow by serving the business audience that uses PCs. Of course that audience has been very willing to buy iPhones, so the ship may have sailed for Microsoft on many users. Still while Windows Phone 8 may never reach Android or iOS numbers, it should be able to steadily grow as long as Windows 8 keeps growing as a computing platform.

The winners have been decided (for now)

It's hard to remember but only a few years ago BlackBerry was a major player with a deeply entrenched user base specifically in the business world. When Barack Obama became president, he lamented having to give up his BlackBerry for security reasons.

A combination of arrogance and incompetence brought the company down -- it waited so long to release a new device that its customer base simply left and learned that maybe iPhones or Android phones weren't so bad after all. It's hard to imagine Apple or Google's many Android partners dropping the ball that badly -- especially with the lesson of BlackBerry's fall from grace so fresh. That means that the top of the leader board is likely fixed for a while with iOS and Android firmly entrenched. That does not mean Microsoft  or even another player can't ultimately force its way into the conversation, but any growth is likely to be slow and steady unless technology changes in way that makes this debate irrelevant.